Gold and silver daily review (June 09, 2014)

For continuous sixth week in a row spot gold prices have been trading lower and hovering around $1250 mark. Prices were pressurized on as equities in the US hits record highs reducing bullion safe haven appeal coupled with a huge decline in investor interest in the futures market. The economic data released from US also paints a bright picture as new factory orders gain for third straight month in a row.

On the other hand, the ECB lowered the deposit rate to -0.1 percent, meaning it will effectively charge banks for holding their money overnight. It cut its main refinancing rate to 0.15 percent, and the marginal lending rate or emergency borrowing rate - to 0.40 percent. ECB’s rate cut stoked investors’ appetite for equities and exerted downside pressure on bullion prices.

Silver

Gold prices traded on a lower side during last week, while silver prices rose by more than 1.5 percent and closed at $19/oz. Strength in the base metals complex and flat dollar index led to price rise in the international markets

On the MCX, silver prices rose by 1 percent and closed at Rs.39997/kg in line with strength in international markets.

Outlook

On an intraday basis, we expect gold and silver prices to trade on a sideways as gold has been falling for last two weeks while silver prices rose in contrast to gains in gold prices. Fall in gold prices will lead to bargain buying which in turn will act as a positive factor boosting prices. Meanwhile there are no major economic indicators to be released from the US tonight.

On the MCX, gold and silver prices are expected to trade flat in line with international markets.